HP beats street with strong PC sales

Hewlett-Packard Co. (HP) posted better-than-expected financial results Wednesday that were buoyed by strong growth in the company's PC group.

Excluding certain charges, HP reported a profit of $1.7 billion or $0.52 per share on revenue of $21.9 billion for its fiscal third quarter, ended July 31. Analysts had been expecting earnings per share of $0.47 on revenue of $21.8 billion according to Thomson Financial.

The company's Personal Systems Group saw revenue grow 8 percent, year over year, with notebook sales jumping 14 percent and desktop PC sales up 5 percent. Operating profit for the group was up too, totalling $275 million for the quarter. Last year the group's profit was $163 million for the same period.

HP's results -- considered a bellwether for the industry -- come during a slowdown in PC sales growth and earnings warnings from companies such as Intel Corp., Advanced Micro Devices Inc. and Dell Inc.

Dell, which is due to announce results on Thursday, has warned of lower profits for its most recent quarter because of "aggressive pricing and slow commercial sales worldwide."

Worldwide, PC sales grew by 9.7 percent year-over-year during the second quarter of 2006, a slowdown from 12.9 percent growth in the first three months of the year.

HP's other main lines of business did not fare as well as the Personal Systems Group. Revenue in the company's enterprise servers and storage business was up only 3 percent, thanks in part to declines in HP's PA-RISC and Alpha systems businesses.

The company's printer business grew by 5 percent but was hurt by a 3 percent slowdown in consumer hardware sales, HP said. Overall, the group remained highly profitable, however, earning $884 million on $6.2 billion in revenue

HP's Services revenue was up 1 percent year-over-year, totalling $3.9 billion, and software revenue was up 30 percent, totaling $318 million for the quarter.